Australian shares edged up on Thursday, supported by a 5 percent surge for miner South32 Ltd on upbeat earnings in a positive sign for the materials sector, boosting heavyweights such as BHP Billiton and Rio Tinto.

Market sentiment got an early boost from South32, which climbed to its highest in a week and was the second biggest gainer on the index after it reported an eight-fold rise in its annual underlying earnings.

“Gains in material stocks is what’s driving the small amount of gains we have on our market today,” said Christopher Conway, head of research and trading at the Australian Stock Report. Conway said the market appears to have benefited from the flow-on effect of South32’s earnings.

Material stocks accounted for more than half the gains on the index with shares of major miners BHP Billiton and Rio Tinto rising 2.2 percent and 1.6 percent respectively, to their highest levels in over two weeks.

Newcrest Mining Ltd climbed nearly 2 percent to its highest in almost four months.

The materials sector has been buoyed by higher prices for metals – a significant export earner for Australia.

Nickel prices surged to an eight-month high on expectations of strong demand from China, Zinc climbed to its highest since August 2007, aluminium rose to near three-year highs on speculation of Chinese capacity cuts and gold prices witnessed gains overnight drawing support from political uncertainty in the United States.

The World number 4 iron ore miner Fortescue Metals Group rose 0.7 percent, though gains were capped as steel and iron ore futures in China fell about 4 percent on Wednesday after a selloff in steel hurt prices.

Financial stocks were down with Commonwealth Bank of Australia slipping 0.3 percent.

In the latest headache for the bank, a law firm on Wednesday threatened to file a class action suit against it for allegedly failing to disclose that it was facing money-laundering charges.

Grocery giant Woolworths Ltd, which has rallied strongly this year, was the second biggest drag on the index with a fall of 3.8 percent to its lowest in a month.

Dairy firm a2 Milk Company clocked a record high for a second straight session, gaining 5.8 percent after it reported a tripling in annual earnings on Wednesday.

Trade Me Group Ltd was the biggest drag on the index, falling 5.4 percent, to its lowest in over eight months. (Reporting by Chandini Monnappa; Additional reporting by Chris Thomas in Bengaluru; Editing by Shri Navaratnam)

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